If you are contemplating going it alone and becoming your own boss, you are not alone. The past decade has seen an explosion in new business startups for a whole host of reasons. In part, it is down to the difficulties faced in the broader economy. Corporate giants have tightened their belts and lucrative career opportunities are harder to find. For another, the internet age has reduced barriers to entry. Startup costs far lower than they once were as a result. Planning a business startup can help you launch a successful business, if it’s done right.
Nevertheless, starting a new business and making a success of it is hugely challenging. And statistics show that 20 percent don?t even survive to see their first birthday. There are numerous ingredients to a successful startup. But here are four considerations that many people fail to give enough attention.
Don?t try to do everything
It?s your business and you want to run it, that?s understood. But if you are bogged down with peripheral issues, you won?t be able to devote your attention to driving the business forward to success. Outsourcing is popular among big businesses. It makes sense for running with optimum efficiency. This holds just as true, if not more so, for a startup. From bookkeeping to web design, the key is to get those non-core activities off your desk. You should want to hand off control to someone who really knows what they are doing, right from the outset. That way, everyone focuses on doing what they do best.
Fully analyze the competition
Competitor analysis will have formed a key part of your business plan, but it needs to go beyond my main competitor is Acme Co, and I can undercut them on price. Understand how they operate, both online and physically. Look at their website, and most important of all, do so from the perspective of a customer, not a competitor. What makes you want to buy from them, or what makes you want to hit the ?back? button and try somewhere else? These are valuable insights that you can use to improve user experience for your own potential customers.
Never stop planning
On the subject of the business plan, this is something that many startups see as a first step, something to be written in order to acquire funding at the preliminary stage, and that can then be filed away for posterity. Yet it is the documents that provides the defining strategic principles, so it needs to always be close to the front of your mind. It should also be a living document that is constantly evolving in the weeks leading up to launch day, and beyond.
Take care of yourself
Running a business is a major responsibility, and as the owner, that responsibility falls squarely on your shoulders. Many entrepreneurs end up working 17 hour days and seven-day weeks, and that?s simply not sustainable. Aside from the impact it will have on your health and home life, it will also do more harm than good to the business, so manage yourself, as much as the business, to ensure you are working at optimum efficiency for the benefit of all concerned.
Thanks for this Kevin. I started a small pizza restaurant in a small town. I had a well-written business plan and years of experience in the industry. Your advice to revisit your business plan is something I’ve not seen written before, but it is solid advice. Along with that is the ability to quickly make adjustments to your original plan. What’s working? What’s not? Are you hitting your targets for sales and customers? If you’re not what are you going to do differently?
I made the mistake of thinking that if I build it (a superior pizza at an great price) they will come. They didn’t and I reacted too slowly to building my customer base. If my sales would’ve ramped up in 6 months instead of 2 years I might have made it, but they didn’t and my business failed.
Remember, when you’re small you can be nimble and move quicker than the big dogs do. Use this to your advantage.
I’m finally ready to jump back in the the entrepreneur world (but NOT the restaurant business!). Looking for something part-time, on the side that I can build slowly (a tip that you and many others have promoted).
Keep up the good work Kevin, I appreciate reading your blog posts!
Hi Sean – I didn’t write this one, Jainie Smith did, but it’s full of good advice. Part of the problem I think is that a lot of advice given to would-be business owners is corporate based. For example, there’s a lot of emphasis on the business plan, which is Corporate 101. But when you’re a small fry working on a financial shoe string, in a true upstart business, a business plan has a way of falling by the wayside quickly.
My advice on starting a business is to start it as a side venture, to a) test the market, and b) get a cash flow going. No cash flow, no business! It’s no more complicated than that, business plan be damned. Once you get a cash flow going, it’s simply a matter of ramping it up. Most people spend a lot just getting the doors open, like with leasehold improvements, furniture, equipment, etc. But when you do that you’re already behind the eight-ball. Get the cash flow going first, then work out the rest. There are ways to do that even in the food business (like being a supplier for an existing business, selling your pizzas through them before opening your own shop). Today you really need to think outside the box and be innovative. There’s no shortage of businesses these days, so the competition is enormous in almost every industry.
My first payday in blogging was less than $5! But I reasoned if I could make $5, I could make $50, then $100, then $1,000. When you’re a little guy, I think that’s the only way. If there’s no market for what you’re selling, the business won’t work no matter how great a business plan is.